Overdue restrictions on loan sharks

Loan sharks ripping off vulnerable people, creating hopeless debt traps, are finally being regulated. This has been a problem for years.

Government crackdown on loan sharks

  • Cap on total interest and fees charged
  • Stiff penalties for loan sharks who break rules
  • ‘Fit and proper person’ test for lenders, door-to-door salespeople and truck shops

The Government is introducing tough new measures to protect people from loan sharks and truck shops, Prime Minister Jacinda Ardern and Commerce and Consumer Affairs Minister Kris Faafoi announced today.

“This Government is committed to making New Zealand the best place to raise a child,” Jacinda Ardern said. “To do that we must stop families becoming trapped in the appalling debt spirals and poverty that result from onerous lending and payback terms.

“These new measures will halt the very worst of those preying on vulnerable and desperate people while enabling borrowing that meets their needs in an affordable way.

“They will protect families through capping the total interest and fees charged loans, introducing tougher penalties for irresponsible lending, and raising the bar for consumer lenders to register as a Financial Service Provider,” Jacinda Ardern said.

The announcement was made at the Vaiola Pl Budgeting Service in Mangere, where the Prime Minister and Minister Faafoi met with people affected by predatory lending as well as budget and financial advice providers.

“The 2015 amendments to the Credit Contracts and Consumer Finance Act (CCCFA) did not go far enough in protecting our most vulnerable consumers from loan sharks,” Kris Faafoi said.

“The introduction of an interest and fees cap on high-cost loans will prevent people from accumulating large debt from a single small loan. For example, if you borrow $500 you will never have to pay back more than $1,000 in total, including all fees and interest.

“The changes also lift the level of professionalism across the industry, by requiring directors and chief executives of lenders offering consumer credit contracts to pass a ‘fit and proper person’ test in order to register as a Financial Service Provider.

“Any lenders breaching the responsible lender principles will face stiff new penalties of fines up to $600,000 under the strengthened enforcement provisions in the CCCFA.

“We listened to consumer advocates and the finance sector’s feedback and will also be seeking increased resources for enforcement and monitoring to ensure lenders who break the law are detected and stopped,” Kris Faafoi said.

The Government is also tackling predatory behaviour by truck shops and others who sell door-to-door on credit or other deferred payment, by requiring all mobile traders to pass the ‘fit and proper person’ test.

The law will also be strengthened to give consumers clearer powers when asking uninvited salespeople to leave their premises, including by strengthening the legal status of ‘do not knock’ stickers, he said.

The new measures will come into effect from 2020, subject to Parliamentary timeframes.

More information on the Review of the CCCFA is available here.

People should be responsible to an extent to their own financial predicaments, especially when they borrow money they can’t afford to pay back, to but exorbitantly priced convenience goods.

But businesses that loan money also have a responsibility to not be predatory, to not engage in impossible to service financial agreements.

‘But the changes won’t take effect until 2020’ is questionable – another urgent problem with a delayed response. Does it really need to take that long to sort out a shitty situation?

Nation: trying to clamp down on loan sharks

An overdue attempt to clamp down on loan sharks is covered in Newshub nation this morning.

Consumer Affairs Minister Kris Faafoi live in studio: Says there were 103,000 potentially dangerous Takata airbags in circulation, says around 53,000 are still outstanding.

They talked to him about loan sharks after that.

Ironically I just checked the spam bin and the only one there is for online loans.

Nothing much on what he said though – and i was multitasking and not really listening so can’t help there.

A lot more on it elsewhere:

From Kris Faafoi:

Credit review and measures to stop predatory lending released for discussion.

Minister of Commerce and Consumer Affairs Hon Kris Faafoi today released the discussion paper outlining findings from the review of the Credit Contracts and Consumer Finance Act.

Possible measures identified in the paper to protect consumers include caps on interest rates and fees, increased licensing or registration for lenders, strengthening enforcement and penalties for irresponsible lending and introducing more prescriptive requirements for affordability assessments and advertising.

Continued predatory behaviour by mobile traders is also considered, as is extension of the Act to cover credit not currently covered including after pay options.

Mr Faafoi says that the findings of the review confirmed what he has been hearing from budget services and vulnerable consumers across New Zealand.

“Clearly the 2015 amendments to the Act did not go far enough and it is time now to finish the job and protect the most vulnerable consumers.

“I’ve spoken with people who have been given loans that are clearly unaffordable for them, and others who have been lashed with huge penalties and fees. These practices trap people and whanau in an appalling debt spiral that is very difficult to get out of.

“While agencies including our hosts today (Salvation Army and Newtown Ethical lending) are doing what they can to help people, we need to ensure the regulatory settings are right to stop the practices that get people into these terrible situations.

“As a Government we are tackling many of the issues that lead to financial stress, and by 2020 the Families package will see 385,000 families with children made better off by an average of $75 a week when the Package is fully implemented.

“Also getting the credit settings are right, so that people can borrow appropriately when they need to but are not dragged into a long-term debt spiral is another way we will ensure all New Zealanders benefit from a strong and inclusive economy.”

The review of consumer credit regulation discussion paper is available here. Submissions close on 1 August.

Christmas – crashed and crushed by consumerism

Christmas has had different meanings to different people. For some it’s one of their most significant religious occasions. To others it’s a time for families to come together, to share presents and to feast.

But increasingly Christmas is being crashed and crushed by consumerism. And families are under increasing financial and commercial pressure.

There are many signs of a corrupted Christmas occasion. I’m not religious, but ‘Toy Story’ advent calendars seems like a super tacky conflict with of the concept of Christ.

Advertising pushes the modern Christmas message hard – buy, buy, buy.

My temple should be a house of prayer,
But you have made it a den of thieves.

And there’s an insidious addition this year – loan sharks advertising cash loans for Christmas, one offering two weeks interest free, another giving you the chance to win yet another consumerist trinket, an iPad or something. Just as the Christmas/New year hangover subsides the exorbitant interest rates kick in, and kick naive borrowers in the guts.

After celebrating the birth of Christ there was a wait of 3 moons before the story was crucified.

Now it only takes three weeks to hammer the poor, who desperately borrowed as they succumbed to commercial seduction, to the money lenders cross.

I got heaven and I got hell.

And what does all this buy us? Apart from battery driven plastic mountains and technocrazy bombardments it buys more and more parental and family stress, and for many it adds to household crippling debt.

What do parents get in return? I know some despair at getting drawn in more and more into the commercial overkill, trying to feed the insatiable hunger of modern consumerism.

And the kids? The more they get the harder they seem to please. If yet another present doesn’t meet demanding expectations it is quickly discarded. Brand names rule, it has to be cool or forget it.

Christmas seems to have become an accelerating commercial treadmill that is very difficult to get off.

Is anyone actually satisfied by this?

Or do we just keep allowing ourselves to be drawn back in to an annual Christmas crushing.

The Temple
(from Jesus Christ Superstar)


Roll on up Jerusalem,
Come on in Jerusalem,
Sunday here we go again,
Live in me Jerusalem.
Here you live Jerusalem,
Here you breathe Jerusalem,
While your temple still survives,
You at least are still alive.
I got things you won’t believe,
Name your pleasure I will sell.
I can fix your wildest needs,
I got heaven and I got hell.
Roll on up, for my price is down.
Come on in for the best in town.
Take your pick of the finest wine.
Lay your bets on this bird of mine.
What you see is what you get.
No one’s been disappointed yet.
Don’t be scared give me a try,
There is nothing you can’t buy.
Name your price, I got everything.
Hurry it’s going fast.
Borrow cash on the finest terms.
Hurry now while stocks still last.
Roll on up Jerusalem,
Come on in Jerusalem,
Sunday here we go again,
Live in me Jerusalem.
Here you live Jerusalem,
Here you breathe Jerusalem,
While your temple still survives,
You at least are still alive.
I got things you won’t believe,
Name your pleasure I will sell.
I can fix your

(fade, screaming)


My temple should be a house of prayer,
But you have made it a den of thieves.
Get out! Get out!
My time is almost through.
Little left to do.

But some people do have something left to do. Judy Callingham has found her solution:

Hiding from Christmas

Maybe more of us can find our own Christmas we can live happily with.